Trade court questions global tariff basis

A court built for customs fights is now asking a basic question about one of President Donald Trump’s biggest trade moves: can a president put a 10% tax on nearly all imports just by pointing to a long-running trade gap? Three judges at the United States Court of International Trade pressed that point in New York on April 10. (reuters.com) The tariff at issue took effect on February 24, 2026, and it covers imports across the board at 10%. The administration did not use the 1977 International Emergency Economic Powers Act this time, because the Supreme Court ruled on February 20, 2026, that that law does not let a president impose tariffs. (reuters.com) (supremecourt.gov) So the White House switched to a different law: Section 122 of the Trade Act of 1974. That law lets a president impose a temporary import surcharge of up to 15% for up to 150 days when the United States faces what the statute calls “fundamental international payments problems.” (federalregister.gov) (law.cornell.edu) That phrase is the whole fight. The administration says the United States current-account deficit and broader balance-of-payments weakness justify the tariff, while the challengers say Section 122 was written for short-term currency and payments stress, not for a trade deficit the country has run for decades. (whitehouse.gov) (reuters.com) The plaintiffs are 24 mostly Democratic-led states and two small businesses. They argue Trump is trying to do with a 1974 trade law what the Supreme Court just said he could not do with an emergency-powers law. (reuters.com) (usnews.com) The judges did not rule from the bench, but Reuters reported they sounded skeptical that a large trade deficit by itself automatically counts as the kind of payments emergency Section 122 had in mind. That matters because if the court narrows that reading, the president’s fallback tariff tool gets much smaller. (reuters.com) There is also a built-in clock on this law. Section 122 tariffs expire after 150 days unless Congress extends them, so even a legal win for the administration would still leave a deadline hanging over importers and exporters. (law.cornell.edu) (federalregister.gov) For companies, this is not just a courtroom theory fight. A 10% border tax changes landed cost, contract pricing, sourcing plans, and whether it is cheaper to keep making a product abroad or move part of it into the United States. (reuters.com) (thomsonreuters.com) That is why the legal theory matters almost as much as the tariff rate. If courts say a chronic trade deficit is not enough, industries that spent the past year planning around broad presidential tariff power may have to start treating Congress, not the White House alone, as the place where lasting trade barriers get built. (supremecourt.gov) (reuters.com)